Russia wants to fall with grain

Russia is preparing for a new record for wheat exports of 35 million tons.
This season, Russia plans to break the world record for US wheat export, established in 2010-2011. Foreign buyers, mainly Turkey, Egypt and countries of Southeast Asia, can purchase 36.8 million tons of Russian grain.

According to the results of the current season, Russia can export 36.8 million tons of wheat, thus breaking the world record set by the USA in 2010-2011 (36.1 million tons), Sovekona director Andrei Sizov said on Friday. The US Agriculture Ministry (USDA) is forecasting the export of Russian wheat at the level of 36 million tons. The forecast of the Ministry of Agriculture of the Russian Federation is 35 million tons. By February 7, 2018, according to operational customs data, Russia exported 24.5 million tons of wheat, which is 37% higher than last season.

Record export is supported by anomalously high activity in November-December, which is more typical for August-September, Mr. Sizov notes. "Lucky with the weather, the ports worked better than expected. In general, the entire infrastructure chain showed that it is able to cope with record volumes of supplies, "he argues. According to the estimates of Sovecon, in December Russia exported 5.4 million tons of grain, including 4.2 million tons, which is comparable to a record November.

In addition, this season, Russia more than ever actively exports wheat to the relatively new markets of Southeast Asian countries, adds Dmitry Rylko, director general of the Institute for Agricultural Market Studies (IKAR).

According to the calculations of the Grain Safety and Quality Evaluation Center on February 16, Russian grain shipments to Vietnam and Indonesia have tripled compared to the previous season, to 1.1 million and 1.03 million tons, respectively. Leadership among the importers of Russian grain is strengthening Turkey, increasing purchases by 56%, to 6.4 million tonnes. The second largest Egypt increased imports by 34%, to 5.5 million tons year on year.

Support the shipments and attractive prices: last week the average quotes of Russian wheat (12.5% ​​protein) exceeded $ 202 per tonne (FOB), Mr. Rylko notes. According to him, such prices have not been the last few years. A week ago, according to the calculations of Sovecon, quotes were at the level of $ 198 per ton. Prices supported by the growth of world markets and the strengthening of the ruble, as well as the active demand from importers, analysts write. So, wheat prices in Paris rose by 1.5% last week, to $ 197.8 per ton. Procurement prices for Russian wheat in ports against this background increased over the past week from 9.5-9.7 thousand rubles. up to 9,6-9,8 thousand rubles. per ton. In addition, the last tender of the Egyptian state-owned company GASC also influenced the market, which resulted in increased prices, said one of the exporters. According to the calculations of Sovecon, contracts for Russian wheat were concluded at rates of $ 206.6-208.4 per tonne (FOB), which is approximately $ 4 per ton higher than at the previous GASC tender.

Last season, Andrei Sizov continued, Russian exports were largely restrained by producers' desire to accumulate reserves in anticipation of more attractive prices: "Now there is an understanding that there are no special grounds for a noticeable strengthening of quotations".

Such a sales shaft may additionally support exports, but it will negatively affect domestic prices, Mr. Sizov notes.

According to "Sovecon", last week wheat of the third class on average traded at 8.6 thousand rubles. for a ton, the fourth - for 7.57 thousand rubles. per ton. During the week the quotes were strengthened by 25 rubles. and 50 rubles. respectively. A year ago domestic prices for wheat of the third class were at the level of 10.3 thousand rubles. for a ton, the fourth - 8,5 thousand rubles. for a ton, follows from the index "Proserno".

According to Mr. Sizov, the weather factor is a certain threat to grain exports. So, due to storms in late January - early February, shipments will be lower than in previous months, but the resumption of active supplies is expected in March. IKAR still estimates the volume of wheat exports this season at 36.5 million tons, but do not rule out a revision of the forecast. If Russia this season will supply more than 36.8 million tons of wheat to foreign markets, it will be able to beat the record of the USA in 1992-1993, according to Bloomberg.